Uncertainty and consumer demand for customization require an agile supply chain
Supply chains that stretch across international borders allow businesses to reach new markets, explore new sourcing opportunities, and save money, but they are certainly not without their challenges. Uncertainty in the geopolitical landscape regarding political upheaval, new trade agreements, and tariffs as well as catastrophic natural disasters have the potential to bring a supply chain to a grinding halt. At the same time, the rise of e-commerce and changing consumer demands place new demands on manufacturing, storing, and shipping. Now more than ever, an agile supply chain is necessary to succeed.
The Building Blocks of an Agile Supply Chain
For decades, supply chains were built rather rigidly, with managers implementing rules and making sure everything fit into the company’s set framework. Now, supply chain managers need to be aware of everything that is going on throughout their supply chain to make sure it can adapt to any situation. Since one person can’t be in different parts of the world at once, delegation of responsibility and the adoption of technology is required.
Software platforms such as Halo give managers of every link in the chain the opportunity to work more efficiently. These platforms offer predictive analytics, modeling of potential problematic scenarios, alerts, and more to keep every vital step up to date on what is happening and informed on what to do in case of an emergency.
Similarly, cloud-based transportation management software (TMS) such as Rose Rocket and Logistically assist with dispatching and deliveries as well as provide real-time invoicing and tracking and visibility of products. This information allows the next stop on the chain to prepare for arrival or for delays to help get back on schedule.
Of course, the software is inconsequential without the right management team in place. Supply chain managers need to promote agility in local managers and hire candidates who are adaptable. Keeping in touch with management across the globe has been made much easier thanks to business teleconferencing services such as ezTalks Meetings and InterCall.
Video meetings with managers keep everyone in the loop and let them feel supported. The key is not to micromanage and to encourage experimentation — members of an agile supply chain should not be afraid to make mistakes. It’s through making these mistakes that the team learns how to adjust and becomes more efficient, especially during times of uncertainty.
Agility in Contracts
A multisource supplier strategy that revolves around building relationships with several suppliers of the same goods is an important aspect of an agile supply chain. Such a strategy is often employed to give buyers leverage when negotiating prices, but it can also be used to negotiate different types of contracts. Zero-volume contracts and buy-back contracts are two types of contracts that can increase agility in the supply chain. A zero-volume contract doesn’t have any set numbers to an order on the buyer’s side so the buyer can have access to a product in case of emergency. Meanwhile, buy-back contracts mean the seller agrees to take back some of the product in the case of low sales or unforeseen circumstances.
Smart contracts can also contribute to an agile supply chain. Using blockchain technology, smart contracts digitally verify the fulfillment of a contract without the need of a third party. Such transactions become part of a public ledger and are trackable, thus it is easy to see where products stand and how the supply chain is running.
Modernizing Warehouses and Distribution Centers
Changes in both the supply chain and customer demand have led to several changes in warehousing. Most notably is the design of the warehouses themselves. As more products are being customized, there is a need for more space for inventory, meaning more volume is needed in the building. Hence, warehouses are growing vertically, often to twice the height of warehouses from a decade or two ago.
Being able to adapt to changes in the industry is made much easier with smart warehouses. Software and automation are the two main characteristics of a smart warehouse, regardless of industry. The software provides accurate tracking throughout the fulfillment of an order — information that can be shared in real time with other members of the supply chain.
Automation increases efficiency and reduces the likelihood of human error, making the fulfillment of each order easier. Increased automation means more power is needed in crowded warehouses, so high-volume, low-speed fans are being installed in the ceilings of modern warehouses.
Smart warehouses can be optimized for specific industries and can use algorithms to be prepared for any potential situation that may arise, from seasonal supply needs to late deliveries from other vendors. A real-time cloud-based connection keeps other vendors and parts of the chain aware of how progress is moving in each warehouse.
There are two options for businesses looking to take advantage of the benefits of a smart warehouse. One option is to rent warehouses set up in that manner from companies such as Smart Warehousing that have locations set up across North America ready for companies to move in and have the area customized according to their needs.
The other option is to fully customize a warehouse by finding warehouse management systems such as the Oracle Warehouse Management Cloud or HighJump WMS to control automation, as well as picking the technologies that are need, from automated picking tools to cobots.
Twenty years ago, it would have been hard for anyone but the most dedicated futurist to imagine what would be needed from the global supply chains of today, and it is even harder to imagine what the next two decades will bring. An agile supply chain is necessary not only for success today, but also to be able to adapt for future success.